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Yen Lags Commodity FX As Risk Appetite Improves

JPY

USD/JPY pulled back from near 140.00 to fresh lows just under 138.50, before stabilizing around 138.80 by the NY close, which is where we currently sit. Yen was towards the bottom end from a G10 standpoint though (up 0.39% for Thursday session), as firmer equity/commodity sentiment saw most commodity related FX outperform.

  • On the downside for USD/JPY, we have the Thursday low at 138.45, the May 24 low printed at 138.23, while the 20-day EMA sits at 137.93. On the topside, resistance is evident at 140.91/93, the bull channel top from the Jan 16 low / High May 30.
  • USD/JPY is still exhibiting a tight correlation with US yield momentum, which is likely to persist in the near term. US yields were 5-7bp softer as unit labor cost/slumping ISM prices paid weighed during the US Thursday session.
  • Cross yen performance will likely be dictated by equity/commodity market trends.
  • The local data calendar has May monetary base figures which are unlikely to move sentiment.
  • The BoJ noted that JGB market functioning has improved, as speculation around changes to the YCC have receded somewhat (see this link for more details).
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